Tuesday, February 03, 2009

Highlights from Reason

Marcia Angell, former editor of The New England Journal of Medicine, has argued that Americans spend so much money on pharmaceuticals partly because many of the drugs people now take “are more likely to be expensive new ones instead of older, cheaper ones.” But a new study from the Manhattan Institute suggests the extra money is well spent.

Columbia University economist Frank Lichtenberg analyzed patterns in the dispensing of prescription drugs in 49 states between 1995 and 2004...States that adopted new drugs more rapidly, Lichtenberg found, had the smallest increases in disability rates. And those newer drugs kept 418,000 additional people off the disability rolls in 2004, saving Social Security $4.5 billion.

People blame all sorts of things for rising medical costs--from government regulations to HMOs to a lack of socialism. But couldn't part of it just be that we are paying for better products? If medicines work better, and don't kill as many people as they used to, why shouldn't they cost more?

The "Citings" feature has many more interesting snippets, on topics including drugs, immigration, surveillance, and intellectual property rights. I found Nick Gillespie's response to calls for a "Newer Deal" most interesting.

A 2004 study[*] by two UCLA economists, Harold L. Cole and Lee E. Ohanian, argues that far from speeding along recovery, such interventions actually prolonged the Great Depression by about seven years.

Using data from the Bureau of Labor Statistics and other sources, Cole and Ohanian zero in on the effects of the 1933 National Industrial Recovery Act (NIRA), which exempted industrial sectors from antitrust prosecution if they agreed to collective bargaining agreements that raised workers’ wages. Roosevelt believed that “excessive competition” was responsible for economic volatility and that by stabilizing labor costs he could stabilize the economy. At the act’s peak, about 80 percent of nonagricultural industry was covered by NIRA, resulting in higher than market wages and prices and, ultimately, lower demand. NIRA eventually was declared unconstitutional, but not before the country felt its impact.

Without NIRA-style interventions rigidifying the economy, Cole and Ohanian believe, the Depression would have been a recession ending in 1936, rather than a prolonged slump that technically ended only in 1943. Roosevelt “came up with a recovery package that would be unimaginable today, allowing businesses in every industry to collude without the threat of antitrust prosecution and workers to demand salaries about 25 percent above where they ought to have been, given market forces,” Cole said when the study was released. “The economy was poised for a beautiful recovery, but that recovery was stalled by…misguided policies.”

I guess it's the thought that counts.

Reason's first article is a scathing criticism of the governator. Given his messianic status as some sort of savior of the Republican party, it should be of interest to more than just fellow Californians.

Schwarzenegger blew into office decrying California’s bloated budget, vowing to “blow up the boxes” of Sacramento’s bureaucracy, and promising to never again let the Golden State go near Gray Davis’ record-setting $38 billion deficit. Five years into the Schwarzenegger era, the budget has ballooned from $100 billion to $145 billion, and the state’s legislative analyst announced in November that California was facing a deficit of $28 billion. Bond market ratings assess the state as a bigger lending risk than Slovakia. And those bureaucratic boxes have remained largely intact...

What are some of these “necessary programs”? How about a $9.9 billion bond for a long-dreamed-of high-speed rail project between Los Angeles and San Francisco that is expected to cost at least $45 billion, which even supporters such as the Los Angeles Times editorial board think will require “many billions more” in subsidies? Then there’s the $3 billion bond from 2004 to put California bureaucrats in the stem cell research business, mostly as a poke in the eye of George W. Bush.

How to pay for all this during what the governor has declared a “financial emergency”? Partly by rattling the tin cup outside the White House. Schwarzenegger was one of the first governors to hit up Washington for some of that fat bailout money gushing from the Oval Office.

But the spending splurge also requires new taxes, according to the governor: a “temporary” 1.5-percentage-point increase in the 7.25 percent sales tax, an increase in the number of services covered by the sales tax, higher taxes for alcohol and oil production, and so on...

Even on social issues, where Schwarzenegger’s more libertarian approach was supposed to avoid the Republican trap of freedom constricting politics, the governor instead has embraced the freedom-constricting policies of the left. To cite one particularly ironic example, in 2004 he signed a law requiring every California employer with more than 50 workers to force upon its managers state-approved sexual harassment training...

Back when he was taping testimonials for Milton Friedman’s Free to Choose, Arnold Schwarzenegger looked like the kind of person who would indeed choose freedom if given a chance to govern. Instead, he punted on the radical, government-reducing reforms offered to him by his own box-exploding California Performance Review and learned to love—or at least perpetuate—the very bureaucracy he was elected to confront. That’s not a blueprint for 21st-century Republicanism. It’s just George W. Bush’s big-government conservatism with a Hollywood face.

If there's anything to be learned from Schwarzenegger, it's that politicians ALWAYS abandon their principles and succumb to pressure when elected to office. Look at the Republicans after 1994. Look at the Democrats now! It's been two years since they took over Congress, and now they have control of the White House too, and as far as I can tell, earmark spending is at record levels, and our soldiers are still fighting in Iraq.

I don't put the blame on the politicians...I'm guessing they run for office with their ideals intact, hoping to create real change. But they're only human, and once they get to Washington, Sacramento, or wherever, they realize that their change isn't wanted. So they can either play the game and help the ruling corporations and interest groups, or they can hang on to their ideals and start collecting unemployment benefits. Our government should not put people in this position to begin with.

Until then, I'll be reading Reason. We'll have free copies at future meetings...come get one!

1 comment:

Anonymous
said...

I voted for most of Governator's initiatives back when he had that special election, minus the parental-notification thing for abortion. He tried to be conservative, but the unions and liberals really skewered him for it.